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Twenty-five years ago, UK industry was reeling from a string of corporate collapses whose names still resonate: Polly Peck, Coloroll, BCCI, and, of course, Maxwell. Those failures put the UK on a path in corporate law and governance that proved novel and revolutionary, with impact far beyond the UK equity market for which it was intended. Is it still up to the task?

The Cadbury Code of 1992 set, in effect, a global standard for ‘good’ corporate governance. Its core tenets persist despite frequent revisions. We hear echoes of them in the governance regimes in countries including Germany, South Africa, Japan, Russia, and even in the listing rules for US stock exchanges.

But the intervening years saw two further major crises involving corporate collapses that made those of the early 1990s seem trivial. In 2001-03, the casualties were too numerous to recount except emblematically: Enron, WorldCom, HIH, Ahold, and the German Neuer Markt of tech-stocks. But even those fade, when compared to 2007-09: Industrie-Kredit Bank and Northern Rock, then Bear Stearns (rescued) and Lehman Brothers (not rescued). Soon the whole house of cards seemed to fall towards the abyss: Merrill Lynch, Fortis, Citibank, General Motors, and so many others. In the UK, RBS – briefly the world’s largest bank – and Lloyds required bailouts to stay afloat, even though their governance arrangements followed almost every provision of the code. Almost a decade on, RBS remains fragile and largely government-owned.

Yet the principles of good corporate governance debated by Sir Adrian Cadbury and his committee in 1992 persist.

In ‘Cadbury and a road not taken’, I explore how the UK Corporate Governance Code arose and developed – and failed to develop – through these recurrent crises. The paper focuses on one key and surprisingly sustained debate: whether the UK should adopt something like the two-tier boards of continental Europe.

It examines, first, contributions to the consultations conducted by Cadbury in 1992, when Sir Adrian flirted with ‘experimentation’ in board design, a suggestion of the distinguished (and then much admired) audit firm Arthur Andersen. The Cadbury archive shows how shocked he was with the reaction of more central voices among corporate and mainstream investors.

The paper then turns to the intense critique the Financial Reporting Council faced in 2003, after the second wave of crises. The FRC wanted a ‘fatal flaws only’ revision of the code in response to the government-sponsored Higgs Review. Higgs recommended giving independent non-executive directors a much stronger role, and naming a senior NED to give them clout. Corporate chairmen worried loudly this was a plan for two-tier boards through the backdoor.

After a third and larger crisis, the debate resurfaced for the 2010 code revision. Advocates of reform – including the Association of Chartered Certified Accountants, as well as less central actors – again urged greater boardroom accountability through board design. Corporate actors and many mainstream investors again fought off the challenge.

This historical account shows a code becoming institutionalised and legitimated. It shows how its logic becomes embedded and persists despite jolts of growing intensity. As discussed in a paper I wrote with Terry McNulty in 2012, the code adapted, to be sure, with more emphasis in director independence in 2003 than Cadbury had dared, then emphasising the subtle relationships needed between directors and between boards and investors in 2010.

And it has impact. Thanks to Cadbury and the roads his code took, directors of listed companies work harder now, and more thoughtfully. But there were roads not taken, paths that might have set the governance of global capitalism in rather different directions. And the code could not prevent catastrophic failures.

Moreover, the world of finance in 1992 is gone. Then, domestic pension funds, the archetype of long-term investment, held a third of UK equities. Add to them domestic insurance companies, mutual funds and other collective investments, and private investors and you could account for four-fifths of market capitalisation.

These were the voices that featured most prominently through these consultations.

And now? Foreign investors hold more than half the value of the market; domestic pension funds just three per cent. The whole main stream of domestic investment holds just 30 per cent. Yet the voices speaking up for UK corporate governance during the consultations are nearly the same as those who spoke to Cadbury or wrote to his committee. My paper also raises a question: How fit is this code – and the process of consultation and debate – if its core goes unchallenged in the face of mounting crises, and of fundamental changes in the investment landscape?

The Financial Reporting Council promises a ‘fundamental review’ of the code in the autumn of 2017. We can hope this time it comes without a crisis that jolts this institution to its foundations. Will we hear fresh voices in the debate, and fresh ideas? Or will this fresh review fail to be so fundamental?